Tuesday, 19 May 2009

Those who still doubt that nothing is really wrong with the Philippine economy should look at the first quarter results of leading listed companies. They show an upbeat economy even as two-thirds of the world is in the midst of a recession.

SMC President Ramon S. Ang said its solid start for the year was sustained by the performance of its beer and liquor businesses, packaging and food group’s recovery, along with tight group-wide financial management actions in 2008.

The largest retailing and banking conglomerate, SM Investments Corp. (SMIC) of Henry Sy Sr., increased revenues by 10.9 percent to P35.1 billion and profits by 13.1 percent to P4.2 billion. Spectacular is its 91.1-percent increase in real estate sales. Even cinema sales rose, by 11 percent to P633.8 million. Ordinarily, in a down market, demand for capital-intensive purchases like property and expenditures for entertainment should decline. They did not.

Jollibee, the largest fast-food operator founded by Tony Tan Caktiong, showed a hefty 13.5 percent in total revenues to P11.3 billion for the first quarter of 2009. Consolidated net income jumped 17.2 percent to P562 million. Net income margin also increased by 20 basis points to 5.0 percent.

Jollibee said “the growth in consolidated system-wide sales resulted from the upward price adjustments, acquisition of a new business and—organic growth.” Imagine, in a slowing economy, the fast food giant even had to increase prices, instead of lowering them to stimulate demand.

The largest telco, Philippine Long Distance Telephone Co. (PLDT), reported a 9-percent increase in first-quarter core income to P10.2 billion on the back of a 4-percent increase in service revenues to P36.2 billion. This gives Chair Manuel V. Pangilinan confidence to project a P40-billion net profit for the whole of 2009, a record.

• SM Prime Holdings, the mall developer and operator, reported a 7-percent increase in consolidated net income to P1.7 billion for January to March 2009 from P1.6 billion last year, on the bank of an 18 increase in revenues to P4.7 billion.

• Sister company SM Development Corp.’s net income for the first quarter jumped 30-fold to P419 million from just P14 million last year, driven by robust real estate sales.

• China Bank posted a 23.9-percent increase in net profit to P884 million for the first quarter, driven by a 36.21-percent surge in net interest income to P1.93 billion.

• The Ayala group’s Bank of the Philippine Islands chalked up an 86-percent jump in first-quarter net income to P2.9 billion as all income sources recorded significant gains.

“From a business perspective, it doesn’t look likely that growth will be zero this year,” according to Manuel V. Pangilinan, chairman of PLDT.

Based on its first-quarter results, PLDT is expected to surpass its P40-billion core net profit target for 2009. “The actual figure will fall north of guidance, a bit more than P40 billion,” Pangilinan predicts.

“Our economy has some resiliency; it is not overly dependent on exogenous factors like exports or investments,” the PLDT chair exults. “Domestic consumption and OFW remittances are both strong and are the key drivers.”

Perhaps, remarkable for bucking the increases in revenues and profits by large companies is the giant real estate, banking and telco conglomerate Ayala Corp. Its net income declined a big 18 percent to P2.2 billion. Still, Ayala Corp. President and COO Fernando Zobel de Ayala was happy. “We see some degree of resiliency in domestic demand despite the slowdown in the global economy,” he gushed.

Still, industry has yet to recover. Production is down as indicated by Meralco electricity sales to industry which declined 10.2 percent in the first quarter. But then industry has a very small share of the economy, 28 percent (versus 66 percent share of consumption).

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